Continuous & Timely Disclosure

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Shareholder Control over Executive Compensation under Bill 101

Bill 101, An Act to Amend the Business Corporations Act (Bill 101), proposes a number of updates to the Ontario Business Corporations Act (OBCA). Introduced as a private member’s bill in early March, Bill 101 aims to shift power to shareholders through amendments in areas such as shareholder meetings, shareholder proxies, as well as the election and diversity requirements of directors. Among Bill 101’s most ambitious changes is to provide shareholders with power over executive compensation. These executive compensation amendments build on a trend in which many public companies are voluntarily providing shareholders with a “say-on-pay”. Bill 101’s proposal in this area, however, goes much further by providing shareholders with the unprecedented ability to both propose and approve executive remuneration policies. The implications of this power raises important questions regarding the respective responsibilities and duties of directors and shareholders.

Shareholders’ Current Say-On-Pay

Most Canadian business statutes, including the OBCA and the Canada Business Corporations Act, explicitly provide directors with the authority to fix compensation for directors, officers and employees, subject only to the company’s articles, by-laws and any unanimous shareholder agreement. Today in Canada there are no corporate or securities laws that provide shareholders with the ability to approve, much less propose, executive compensation.

While not legally required to do so, a trend in recent years has seen many publicly listed Canadian companies voluntarily provide shareholders with a vote on executive compensation. These say-on-pay motions are advisory only, with the results not binding the directors’ decisions. Although non-binding, the say-on-pay process is seen as providing shareholders with value by encouraging directors to consider and clearly explain compensation policies to shareholders.

While the voluntary adoption of non-binding advisory votes is steadily increasing, Canada lags behind certain other jurisdictions in both mandating say-on-pay votes and in providing teeth to the votes through binding outcomes (see a recent Timely Disclosure post). For example, the United Kingdom and Australia have mandated periodic shareholder votes on executive compensation policies.


Continue Reading A Radical Shift to Say-On-Pay under OBCA’s Bill 101

On April 6,2017, the Canadian Securities Administrators (CSA) released CSA Consultation Paper 51-404 Considerations for Reducing Regulatory Burden for Non-Investment Fund Reporting Issuers (Consultation Paper 51-404). The purpose of Consultation Paper 51-404 is to consider certain legal requirements where the CSA believes there may be ways to reduce the costs and burdens of regulatory requirements

chairs-1840377_1280Stephen Erlichman recently wrote “Majority Voting: Latest Developments in Canada”, a short piece published in the March 22 edition of the Harvard Law School Forum on Corporate Governance and Financial Regulation. The article explains the latest developments in Canada with respect to 1) the Toronto Stock Exchange’s new guidance with respect to its

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It would be an understatement to characterize the presence and use of social media in our daily lives as being ubiquitous in scope and nature. The proliferation of social media venues allows us to communicate and share ideas and opinions in a manner beyond anything that we have experienced in human existence. The casual observer

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Recent computer-security breaches have brought to the forefront the need for enhanced cybersecurity and disclosures surrounding cybersecurity risks.

In response to the growing risks associated with a digitally-linked world, the Canadian Securities Administrators (CSA) issued Staff Notice 11-332 Cybersecurity to review current issues in cybersecurity from a reporting issuer’s point of view.  That Staff Notice

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As the New Year rolls along, so does commentary on executive compensation. According to the Canadian Centre for Policy Alternatives, by 11:47 am on the first working day of 2017 (January 3rd) Canada’s 100 highest paid CEOs on the TSX index had earned the equivalent of the average annual Canadian wage.

Shareholder votes on the executive compensation disclosed in management proxy circulars (“say on pay”) are not mandated in Canada. However, according to the Institute for Governance of Private and Public Organizations, 80% of the largest Canadian companies have adopted the practice voluntarily or as a result of pressure from investors.

Say on pay initiatives have been well under way in many jurisdictions for a number of years and the reviews are in.

International Say On Pay

In the US, under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities Exchange Commission requires a mandatory advisory say on pay for top executives compensation for public companies. Under the compensation discussion and analysis section of the proxy statement, shareholders do not vote on bonuses, stock options, retirement pay or other specific elements of compensation, simply an “up” or “down” to compensation.

In the UK, companies with shares on the Financial Services Authority’s List require a binding (rather than advisory) annual say on pay vote by shareholders.


Continue Reading The Canadian Say on “Say on Pay”

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Last month, federal prosecutors achieved a resounding victory in a tipping case before the U.S. Supreme Court in Salman v. United States, 580 U. S. ____ (2016).  In its much anticipated decision, the Court held that a jury could infer that the tipper personally benefited from making a gift of confidential information to a

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In December, the Alberta Securities Commission (ASC) published its annual Corporate Finance Disclosure Report (Report). The ASC then hosted an information seminar (Seminar) on the Report’s findings and recommendations in Calgary, Alberta on January 11, 2017. Fasken Martineau was pleased to attend the Seminar with a view to advising our reporting issuer clients as to best disclosure practices.

The ASC chose to focus on commodity price impacts on continuous disclosure by reporting issuers, as opposed to the more typical practice of a broader-scope report. As such, the Report gave topical and important reviews, in that context, on the use of non-GAAP measures (NGMs) and forward-looking information, as well as impairment of assets under accounting standards. Most prominent among the continuous disclosure issues in the Report, however, was liquidity and capital resources information in management discussion and analysis disclosure.

We expect the ASC will be paying particular attention to fulsome and timely disclosure of liquidity and capital resources information in 2017, particularly in respect of plans to remedy working capital deficiencies, conditional borrowing limits, risk of breach of financial covenants, and impacts on production capacity maintenance following capital expenditure reductions and asset dispositions.


Continue Reading ASC Provides Disclosure Guidance for 2017

Securities Regulatory Authorities Release Results of Gender Diversity and Term Limit Disclosure Review

Securities regulatory authorities in Ontario and nine other provinces and territories of Canada published CSA Multilateral Staff Notice 58-308 Staff Review of Women on Boards and in Executive Officer Positions – Compliance with NI 58-101 Disclosure of Corporate Governance Practices on September